Two years ago, Prashant Sharma, an entrepreneur based in Gondia, 120 km from Nagpur, created a product called SmartDriver, which monitors whether a driver blinks or is yawning behind the wheel. Sharma, 43, spent Rs 15 lakh from his own pocket to develop the product.

SmartDriver soon came to the attention of Nasscom 10K, a programme launched by the technology lobby group to support and impact 10,000 startups in India by 2023. The project was moved to a Mumbai warehouse (as Nasscom prefers to call its incubation centres as opposed to traditional garage startups) and came under the gaze of IT company Tech Mahindra and Fulora Foundation, an NGO that works in multiple areas including road safety.

So far so good. The problem is SmartDriver is yet to get an investor. Sharma says SmartDriver needs product development support and Rs 15 lakh immediately to scale the idea. “I’m waiting for funding.”

In many ways, SmartDriver embodies the fundamental problem of 10K Startups. In terms of overall numbers, the Indian startup ecosystem has about 4,200 startups a year, ahead of Israel (about 4,000) and catching up with the UK’s roughly 4,800 a year.

Since launch, Nasscom 10K Startups has attracted 13,937 applications, of which 1,255 have been shortlisted. But only 246 startups have received funding, raising serious questions about the robustness of the programme.

Patchy StartThree years have passed since Nasscom launched the ambitious programme. It was billed as the single largest platform of its kind, celebrated as a harbinger of a robust startup ecosystem in India.

Sponsors included some of the biggest names in global technology business — Google, Microsoft, Amazon Web Services, IBM, Intel and Verisign. They put in about $100,000 each annually and help set up centers of excellence and create enabling infrastructure like Internet of Things (which enables everyday objects to have network connectivity) labs. Startups would test ideas in these labs.

Nasscom president R Chandrashekhar says 10K Startups is the making and maturing of the Silicon Valley of India, of course with local nuances. Local nuances refers to entrepreneurs solving local problems in areas such as healthcare, education, e-commerce, telecom, power and so on rather than set-up global scale startups like Uber and Airbnb. “India will see large number of small, mid-size successes and not mega successes,” says Chandrashekhar.

Yet, success has been patchy. Gaurav Arora, head of startup ecosystem Asia-Pacific, Amazon Web Services (AWS), says the signal to noise ratio is not so good.” Arora blames it on the several `me-too’ startups — copycats of successful startups in the US and even in India — flocking to Nasscom 10K. Investors have also turned stingy and there is now greater emphasis on unit economics rather than building top line through discounts. “Not many startups appreciate this early on,” Arora adds.

That is not to say there is no investor interest. According to US startup database CB Insights, India ranks third, after the US and Israel, in global tech startup exit activity (startups getting acquired) in the first half of 2016. But as Avinash Sabharwal, who heads corporate strategy at Accenture India, says, “There is serious risk averseness of larger Indian corporates to engage with startups.”

To be sure, Nasscom 10K mixed success is a reflection of the travails of the Indian startup scene. After pumping billions of dollars into Indian internet startups for more than two years, global investors have tightened purse strings as the once giddy valuations of these companies have been tempered by elusive profits.

Chandrashekhar says in the past there was no template for startups, so funding was easier. “Investors now realise that India is not like the US or China. There are more B2C ideas in India, capital squeeze has meant more emphasis on bottom line rather than top line. Entrepreneur is being questioned more on the business model.”

Nonetheless, Nasscom 10K has brought visibility to shortlisted companies among angel investors who can see first-hand ideas. Abhijit Saxena, former CEO of NetCore Solutions, believes platforms like Nasscom 10K are good for rookie entrepreneurs who don’t have industry connects. Only an experienced entrepreneur or someone connected to the industry is better aware of how to directly approach angel investors, says Saxena, who is running two startups.

If only funding was as easy. Take KleverMind. Founded by 32-year old Sanghamitra Pattanayak of Delhi, the startup was shortlisted by Nasscom within two months of launch. But the platform, which helps anxious parents apply to multiple schools for admissions in Delhi, failed to get funding.

Fortunately Ashish Gupta, co-founder of Evalueserve, a Gurgaon-based analytics outcourcing firm, put seed money in the venture. “That was quite a relief as we were digging into our resources to build the company,” says Pattanayak.

Likewise, The Things Cloud, which enables consumers of electricity to become producers of electricity, is still hunting for funding. Founded by 32-year-old Amruth Puttappa, The Things Cloud enables an inverter to share power with the grid, earning money for the owner, when not in use.

Put tappa has approached the Small Industries Development Bank of India for a grant. He is still at a Nasscom warehouse, where startups can stay initially for six months and get three extensions of six months each, hoping funding will eventually come. (In all Nasscom has eight warehouses, housing 250 startups).

Sponsors Don’t Fund IdeasWhat about the money that each sponsor — six global tech firms and Kotak Mahindra Bank — invests? That money goes into promoting Nasscom 10K and not to fund ideas. In the first year, Nasscom held more than 600 events in 23 cities and connected with more than 20,000 entrepreneurs. This resulted in 7,000 applications in the first year, though only 529 were shortlisted. The second year saw more promotions, developer talks and incubation centers and warehouses.

Nasscom has about 20 incubation partners like T-Labs, Venture Nursery, HealthStart and 70 other partners, which comprises angel networks and companies interested in developing the startup ecosystem.

According to Nasscom the money from sponsors is to create an ecosystem for startups, create awareness, build infrastructure (like warehouses and labs) rather than to fund ideas. “If companies like Google or Microsoft want to fund, they have separate arms like Google Ventures or Microsoft Ventures to do that,” says Rajat Tandon, vice president, Nasscom, who spearheaded Nasscom 10K but quit on 30th September.

Even so, the failure of startups to elicit funding is ostensibly due to a proliferation of ‘me-too’ ideas. “We said no to many ecommerce startups,” says Tandon. Nipun Mehrotra, VP, strategy and growth initiatives, IBM Asia Pacific says if you have 20 companies doing home delivery of food, you can’t be the 21st doing the same. “You need differentiation.”

According to Mehrotra, India is too much B2C focused. It needs to shift to product-based ideas, he says. Indeed, the number of applications so far this year are less than half of the previous years. Tandon also blames the small angel investor community for the lack of investor appetite to back ideas. “Our angel network is about 200 people compared with more than 5,000 in the US. Early stage booster is absent though better ideas are being built now,” he says.

Tandon has no doubt that there will be 10K shortlisted ideas by 2023. “But all may not be funded.” The good news is that Nasscom has seen a significant improvement in quality of ideas. The first year had plenty of copycat ideas, but the second had ideas that sought to differentiate and solve local problems. Consumer tech continues to be most attractive space for entrepreneurs. Though up to 22% of the applications this year have been from IoT.

Despite the challenges, sponsors of Nasscom 10K are bullish about the future. Sandeep Aurora, director marketing and market development, Intel South Asia, says 10K is a good number to go after. “Even if we reach 7K or 8K, it will be a success,” he says.

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